Detection Technology Plc financial statements review January-December 2023

Detection Technology Plc company announcement 1 February 2024 at 09:00 (EET)

DETECTION TECHNOLOGY PLC FINANCIAL STATEMENTS REVIEW JANUARY-DECEMBER 2023

Detection Technology Q4 2023: Record-breaking sales, results at target level

October-December 2023 highlights

• Net sales increased by 10.9% to EUR 31.3 million (28.2)
• Net sales of Industrial Solutions Business Unit (IBU) increased by 7.1% to EUR 5.0 million (4.6)
• Net sales of Medical Business Unit (MBU) increased by 3.6% to EUR 13.1 million (12.7)
• Net sales of Security Business Unit (SBU) increased by 21.1% to EUR 13.2 million (10.9)
• Operating profit (EBITA) excluding NRI was EUR 4.6 million (2.8)
• Operating margin (EBITA-%) excluding NRI was 14.8% of net sales (9.9%)
• Operating profit (EBITA) was EUR 4.6 million (2.8)
• Operating margin (EBITA-%) was 14.8% of net sales (9.9%)
• Earnings per share were EUR 0.24 (0.16)
• Earnings per share (diluted) were EUR 0.24 (0.16)

January-December 2023 highlights

• Net sales increased by 5.3% to EUR 103.8 million (98.6)
• Net sales of IBU increased by 0.2% to EUR 16.1 (16.1)
• Net sales of MBU increased by 0.5% to EUR 48.4 million (48.1)
• Net sales of SBU increased by 14.3% to EUR 39.3 million (34.4)
• Operating profit (EBITA) excluding NRI was EUR 9.7 million (6.1)
• Operating margin (EBITA-%) excluding NRI was 9.3% of net sales (6.2%)
• Operating profit (EBITA) was EUR 8.8 million (5.8)
• Operating margin (EBITA-%) was 8.5% of net sales (5.9%)
• Earnings per share were EUR 0.38 (0.35)
• Earnings per share (diluted) were EUR 0.38 (0.35)
• Dividend EUR 0.23 per share* (0.20)

UNAUDITED (Figures in parentheses refer to the corresponding period of the previous year.) (*The Board of Directors’ proposal to the AGM.)
 

President and CEO, Hannu Martola:

“The year 2023 culminated in record-breaking Q4 sales and a significant improvement in our result. Efficiencies carried out in Q3 along with good growth in sales boosted our profitability to the target level. Despite fiercer competition, we maintained our market positions in all our businesses. This is a solid foundation to go forward.

Our industrial sales increased thanks to our new thin-film transistor (TFT) flat panel detector portfolio but still lagged behind our growth target. Regarding sales split by applications, the lion’s share of sales originated from applications optimized for quality inspection in the automotive industry. Whereas demand in the food sector, which has traditionally been important to us, remained modest. We believe that our product portfolio, which expanded thanks to our business acquisition, will open up opportunities in new applications and help us to turn our industrial sales onto a stronger growth path.

Despite the continuing uncertainty in the global medical market, the Chinese government's ongoing anti-corruption campaign targeted at end-operators in the healthcare sector, and fierce price competition, our medical application sales grew slightly. Demand improved toward the end of the year, as the Chinese public administration’s annual budgets closed. In our view, the impacts of the anti-corruption campaign on demand dynamics will continue during H1 2024. We are cautiously optimistic that demand will increase globally at the end of H1 2024.

Growth in demand continued to take off in aviation computed tomography (CT) and line scanner applications in India and particularly in the Americas, which resulted in a significant increase in our security applications sales. Demand also recovered in other applications, such as cargo scanning applications. In terms of geographies, malaise continued in China, but we expect investments in aviation CT applications to restart there during this year. We have a strong position in higher-end solutions in the global security markets.

The efficiencies carried out in Q3 2023 paid off: our fixed costs decreased, in addition to which the increase in sales exceeded expectations. Thanks to these factors, we reached our profitability target. We generated cost savings of about one million euros in H2 of 2023 and expect annualized savings of around two million euros going forward.

The development of our new facilities in Oulu, Finland progressed as planned. The modification works were completed in January, and this morning, as we publish our results, our team will start working on the new premises. Our customers have warmly welcomed our expanded production in Oulu¬—this strategic change will improve our global capabilities and competitiveness.

The most significant event this year was our business acquisition. We successfully completed the integration process of Haobo Imaging in Q4 2023, and we have continued the development and sales of our new product portfolio. We believe our new business will grow faster than our traditional businesses.

Given the Chinese anti-corruption campaign, uncertainty in the medical markets will continue, and in our view, medical sales will decrease in Q1 and H1 2024. We expect growth, however, to continue in our other main markets, and both our security and industrial applications sales to see double-digit growth in Q1 and H1 2024. Overall, we anticipate our year-on-year sales to remain stable in Q1 and H1 of 2024, and annual growth to be close to our target.”
 

Key figures

(EUR 1,000)	10-12/2023	10-12/2022	1-12/2023	1-12/2022
Net sales	31,315	28,226	103,794	98,580
Change in net sales, %	10.9%	14.1%	5.3%	9.8%
EBITA excluding NRI	4,622	2,804	9,656	6,135
EBITA excluding NRI, %	14.8%	9.9%	9.3%	6.2%
Non-recurring items (NRI)	0	0	-873	-335
EBITA	4,622	2,804	8,784	5,801
EBITA, %	14.8%	9.9%	8.5%	5.9%
R&D costs	2,723	3,069	11,702	12,549
R&D costs, % of net sales	8.7%	10.9%	11.3%	12.7%
Cash flow from operating activities	2,987	3,730	9,672	-294
Net interest-bearing debt at end of period	-12,665	-20,584	-12,665	-20,584
Investments	1,121	654	14,426	1,628
Return on investment (ROI), %	9.9%	7.5%	9.9%	7.5%
Gearing, %	-17.4%	-28.3%	-17.4%	-28.3%
Earnings per share, EUR	0.24	0.16	0.38	0.35
Earnings per share (diluted), EUR	0.24	0.16	0.38	0.35
Number of shares at the end of the period	14,655,930	14,655,930	14,655,930	14,655,930
Weighted average number of shares outstanding	14,655,930	14,655,930	14,655,930	14,655,930
Weighted average number of shares outstanding, diluted	14,655,930	14,655,930	14,660,912	14,717,042

Business outlook

Detection Technology expects its year-on-year total net sales to remain stable in Q1 and H1 of 2024.

Geopolitical situation, U.S.–China relations, global economy, inflation, the high stocks of some of the company’s customers, the indirect impacts of the war in Ukraine, and events in the Middle East create uncertainty.

Detection Technology aims to increase its sales by at least 10% per annum and to achieve an operating margin (EBITA) of 15% in the medium term.

Q4 2023 webcast

Hannu Martola, the President and CEO of Detection Technology, will present the Q4 and January–December financial performance and events to analysts, investors, and media at a webcast. The live webcast in English will begin on 1 February 2024 at 13:00 (EET).

A link to the webcast is available on the company's website at https://www.deetee.com/reports-and-presentations/webcasts/. A recording of the webcast will be available later on the same web address.

This release is a summary of Detection Technology’s financial statements review January–December 2023. The complete report can be found attached to the release and on the company's website.

Board of Directors, Detection Technology Plc

Further information

President and CEO Hannu Martola will be available for interviews and further information on the release date at 9:00-11:00 (EET).

Hannu Martola, President and CEO
+358 500 449 475, [email protected]

Nordea is the company’s Certified Advisor under the Nasdaq First North GM rules, +358 9 5300 6774

Detection Technology is a global provider of X-ray detector solutions and services for medical, security, and industrial applications. The company’s solutions range from sensor components to optimized detector subsystems with ASICs, electronics, mechanics, software, and algorithms. It has sites in Finland, China, France, and the US. The company’s shares are listed on Nasdaq First North Growth Market Finland under the ticker symbol DETEC.

Distribution: Nasdaq Helsinki, key media, www.deetee.com